TD: $15 minimum wage could cost Ontario 90,000 jobs by 2020

Sep 27 2017, 11:03 pm

Ontario’s proposed minimum wage hike could cost the province between 80,000 to 90,000 jobs by 2020.

According to an economic assessment report by TD Bank, raising the minimum wage to $15 can generate benefits to the province, but the speed in which its being implemented will likely have a negative impact on employment.

The provincial government announced its plan to hike minimum wage as part of its labour market reform. The wage is expected to increase to $14 on January 1, 2018 and then $15 in 2019.

“Ontario’s bold plan to raise the minimum wage by one-third over the next 18 months has fueled much debate about its potential impact on Canada’s largest economy, with commentary deeply divided on the issue,” states the report.

Earlier this month, the Financial Accountability Office of Ontario (FAO) said that the wage hike would result in a loss off about 50,000 jobs, in a report assessing the impact of the wage increase in the province, and warned that higher payroll costs may result in layoffs for businesses.

While there will be job loses, TD Bank reported the economy in Ontario will continue to grow, but at slower rate of 0.5% annually.

But cities where wages are generally higher won’t be impacted as much as smaller cities, said TD.

“Cities where wages are generally higher will be able to absorb the impacts of the minimum wage hike most easily,” it said. “This is because low wage industries typically make up a smaller part of these economies, or the low wage industries in these areas generally pay more to begin with.”

Hamilton, London, Kingston, and Windsor were named as some of the cities that would be more severely impacted, while Toronto and Ottawa will likely experience modest impacts by the wage increase.

TD Economics encourage the Ontario government to consider extending the implementation period by at least two years, to 2021, to reduce impact on the economy.

It’s also recommending the introduction of differentiated minimum wage across the province.

“A province-wide minimum wage fails to factor in the large divergence in median wage rates across the regions. As such, Ontario could consider the model used in a number of U.S. states that allows minimum wages to be established at the city level,” stated the report.

In the Toronto area, a minimum wage of $15 would maintain a ratio relative to average income in the 50-60% range, TD stated as an example. But in Windsor, where a larger impact would occur, a $11-$12 level would be more appropriate.

The current minimum wage in Ontario is $11.40 an hour.

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